Microsoft's Xbox One reflects game change in home entertainment

Dawn C. Chmielewski

The battle for control of the living room just became more fierce.

Microsoft Corp. on Tuesday unveiled the Xbox One, a next-generation video game console that aspires to be more than just a plaything. Not only will the Xbox One deliver an amped-up game experience, but it also will let users watch live TV, rent a movie and listen to music.

Viewers can use their voice and gestures to control the TV too. Want to change the channel? Just tell the Xbox One to turn on ESPN for a baseball game, check out a movie on HBO or launch an on-demand service such as Netflix.

"It's time for technology to step behind the curtain and for you and your entertainment to take center stage," said Don Mattrick, president of Microsoft's Interactive Entertainment Business. "We're thrilled to unveil the ultimate all-in-one entertainment system."

Microsoft said 15 new games would be introduced at the console's launch later this year. The company also struck a deal with filmmaker Steven Spielberg, who will executive-produce a television series based on the blockbuster "Halo" franchise, and a multiyear partnership with the National Football League to deliver interactive television experiences on the Xbox One.

The Xbox One is positioned to compete with Nintendo's Wii U and Sony's forthcoming PlayStation 4 game systems. But it's also meant to go up against a growing number of Internet-connected TVs and gadgets in the living room that draw entertainment from a variety of sources.

Its arrival reflects the dramatic changes in how consumers choose to be entertained in their homes since the 2005 introduction of the Xbox 360.

"The battle for consumers' time has shifted radically to multimedia entertainment," said veteran video game analyst P.J. McNealy, chief executive of Digital World Research. "So you have to have a connected device that allows you to watch TV, that allows you to watch movies, to listen to music, to communicate with friends, to play games."

In many ways, the Xbox One represents a natural evolution for a game console that increasingly is being used to deliver a broad spectrum of entertainment in the home. About half of American TV households have game consoles that they connect to their TVs — and 22% of the time spent on these systems is devoted to watching Internet streamed video, according to research from Nielsen.

Last year Microsoft reported that Xbox 360 owners spend more time online watching video and listening to music than playing games.

Microsoft founder Bill Gates made clear the company's ambitions for the home in 2001, when he unveiled the first Xbox in a keynote address at the Consumer Electronics Show in Las Vegas.

"He said, 'We're going to be entering the living room,'" Wedbush Securities analyst Michael Pachter said. "What Microsoft is positioned to do is give you a hybrid between on-demand, whatever you want, whenever you want it [entertainment], plus live broadcasts."

The Xbox One is designed to sit in between a cable or satellite set-top box and the TV so that it can bring online and televised entertainment into one easy-to-use interface. Mattrick said the goal was to simplify an entertainment experience "that has become too complex, too fragmented, too slow."

As with a growing number of Internet-connected TVs and devices, the Xbox One will deliver a more personalized entertainment experience. Using an updated version of the Kinect, with its built-in camera and sensors, the next-generation console can recognize the person sitting on the couch — and serve up favorite games, TV shows and other content through a home "dashboard."

The Xbox One will provide recommendations based on past viewing habits as well as what's popular on TV and among friends.

Gamers will find a more muscular console that makes for heightened fidelity, as well as new features such as "smart match," which pairs online players of comparable skills to eliminate wait times. A game DVR captures highlights of game play that can be shared. More advanced artificial intelligence learns how you play, so friends can play against your shadow.

The Xbox One will come with a built-in Blu-ray disc drive and a new controller with more than 40 technical and design innovations.

Another Microsoft executive, Marc Whitten, explained how a trio of software operating systems — one based on the game console's existing code, another compatible with Windows 8 and a third to allow the console to instantly switch between the two — would create a "future proof" system.

Xbox One SmartGlass technology automatically links the game console with compatible smartphones and tablets, so these portable devices can interact with the TV as a remote control.

The introduction of the Xbox One comes at a time when hardware sales have slowed, as typically occurs late in the console cycle, and consumers increasingly are turning to their mobile phones and tablets to play games.

Macquarie Research analyst Ben Schachter, while lauding some of the console's new features, said the Xbox One offered "nothing earth-shattering."

"There was no word on pricing," Schachter wrote. "We think it will be absolutely key in determining the pace of adoption beyond the initial launch surge."